Let’s talk about Stamp Duty.

Apart from some minor exemptions, Stamp Duty is paid by anyone buying a property over £125,000 in the UK.

It presently raises £10.68bn a year for HM Treasury (interesting when compared with £27.6bn in fuel duty, £10.69bn in alcohol duty and £9.48bn in tobacco duty).

In the latest set of data from HMRC, in the MP constituency that covers Rotherham, property buyers paid £5m stamp duty in one year alone – a lot of money in anyone’s eyes (although not as much as the £92m in income tax that all of us in the same area paid last year).

annual-tax-rotherham-residents

However, as you may know, George Osborne introduced an additional tax for landlords and from April 2016 they had to pay an additional 3% stamp duty surcharge on top of the normal stamp duty rate when purchasing a buy-to-let property. There were tales of woe predicted, with a report by Deutsche Bank suggesting that the new surcharge could see house prices fall by as much as 20%.

HMRC data released in the Summer for Quarter 2 (Q2) of 2016 did seem to back up those fears as they published some worrying figures; only one in seven properties purchased was a second home or buy-to-let (in real numbers, only 30,300 of the 207,900 properties in Q2 were bought by landlords).

In previous articles, I spoke about the slump of property transactions after the 1st of April. Landlords rushed through their property purchases in March to beat the April deadline. In Q2 of 2016, £1.976bn was raised in Stamp Duty from Residential Property. Of that £1.976bn, £652m was paid by buy-to-let landlords (£424m in normal stamp duty and £228m in the additional 3% surcharge).

However, looking at Q3, the numbers have improved significantly.

Of the 235,000 property sales, nearly one in four of them (56,100 to be precise) were bought by buy-to-let landlords and of the £2.208bn in stamp duty, £864m was paid in ‘normal’ stamp duty and an impressive £442m paid by those same landlords in the additional stamp duty surcharge.

The statistics suggest buy-to-let investors have thankfully not been deterred by the stamp duty surcharge introduced in April this year.

The figures also show that 65.4% of “buy-to-let” purchases cost less than £250,000, 23.7% of properties were in the £250k to £500k range and 10.9% (or 6,100 additional properties) of buy-to-let properties bought cost over £500k – interestingly nearly one in four (22.2%) of £500k properties purchased in Q3 were buy to let properties.

It just goes to back up what I stated a few weeks ago when I suggested that many investors had rushed to make purchases before 31st March, This made figures in the following months (Q2) artificially low when the 3% supplement was introduced, but in Q3 the number of buy-to-let properties purchased increased by 85%.

It just goes to show you shouldn’t believe everything you read in the newspapers! I can assure you the Rotherham property market is doing just fine.

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